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Saturday,12-June-2021

Business

Moody: NBFCs pulling back on loans to MSMEs

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The liquidity crisis triggered after the default of IL&FS is causing the non-banking financial and housing finance companies to pull back on loans to micro, small and medium sized enterprises (MSMEs), Moody’s said on Wednesday.

“The value of loan against property (LAP), assets under management by HFCs and NBFCs increased by 8.3 per cent over the six months leading to December 2018, down from 15.4 per cent growth over the previous six months,” Moody’s said.

Moreover, according to Moody’s, it does not expect LAP lending by NBFCs and HFCs to pick-up significantly in the next few months too as the operating environment remains challenging for them as they continue to face issues with accessing funds.

“Indian non-banking financial companies (NBFCs) and housing finance companies (HFCs) are pulling back on loan against property (LAP), lending to micro, small and medium sized enterprises (MSMEs) because of the funding squeeze caused by the liquidity crisis in the country’s financial sector,” Moody’s said in a note.

This situation is credit negative for asset-backed securities (ABS) backed by LAP to MSMEs, because it will reduce refinancing options for these small businesses, potentially leading to loan delinquencies and defaults, the brokerage firm added.

Besides, it said that the declining real estate prices in some cities and a slower pace of price growth in others has curtailed refinancing of LAP and hurt recovery prospects for defaulted loans.

Business

GST Council meet begins, may consider duty cuts on medical supplies

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GST

The 44th meeting of the GST Council, the second this year in the midst of the second wave of Covid pandemic, began on Saturday morning through video conferencing.

The meeting is being chaired by finance minister Nirmala Sitharaman and is being attended by finance ministers of all states and union territories. Senior officers from the Centre and States are also present in the meeting.

The meeting is taking place after the 43rd meeting of the Council on May 28 announced a series of duty concessions on Covid relief items in addition to relaxation of compliance measures for taxpayers.

At the last meeting of the Council, it was decided to form a group of ministers (GoM) to examine the need for further reductions and decide on any new rates for medical equipment and vaccines.

The meeting is expected to consider recommendations of the GoM while offer more compliance relaxation to taxpayers.

It may also announce few measures to correct the inverted duty while discuss the compensation cess dues arising in 2021-22 due to a possible shortfall in cess collections.

Two other important items including lowering of GST rates for two wheelers and bringing natural gas into the indirect tax fold may also be included in the agenda for discussion.

Sources said certain states like Punjab have sought GST duty cut on essential medical supplies meant for Covid treatment. The council may accordingly discuss some of the measures like reducing GST or exempting from duty of Corona virus related items like hand sanitisers, face masks, gloves, PPE Kits, temperature scanners, oximeters, certain Covid medicines and ventilators among others based on suggestions of the GoM.

The meeting is also to take political colour with few opposition ruled states like West Bengal, Punjab have been pushing for exempting Covid vaccine from GST. The finance ministry has been opposing such a move that would deny the benefit input tax credit for producers.

Also, the GST compensation for FY22 is expected to dominate the discussions of the Council with States seeking higher compensation in the wake of fall in tax revenue expected this year due to pandemic related disruptions and lockdowns in various parts of the country.

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Business

Double century in Sri Ganganagar: Petrol-diesel above Rs 100/l mark

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Petrol

Sri Ganganagar, a small city in northernmost part of Rajasthan near the India-Pakistan border has become the first city in the country where retail prices of both auto fuels — petrol and diesel — have crossed the century mark.

The city already had the distinction of having the highest pump price of petrol across the country at Rs 107.23 a litre. With diesel prices now increasing there by another 25 paisa per litre on Saturday it reached Rs 100.06 a litre.

However, the record may not be held for long as elsewhere in Rajasthan as well, especially towns near the border areas, diesel is expected to touch the Rs 100-mark soon.

Similarly, a few places in Madhya Pradesh, Maharashtra, Telangana and Andhra Pradesh, where by virtue of higher VAT rates, fuel prices are always much higher than rest of the country. Premium fuels have already been above the Rs 100-mark in several cities for past few months.

What had brought fuel prices closer to Rs 100-per-litre-mark is the consistent increase in retail prices done by oil marketing companies for last five to six weeks.

Even on Saturday, OMCs raised the price of petrol and diesel by 22-32 paisa per litre across the country, the second consecutive increase in as many days.

With the latest increase, the retail prices of petrol and diesel increased by 27 paisa per litre and 23 paisa per litre to touch Rs 96.12 and Rs 86.98 per litre, respectively in Delhi.

In Mumbai, where petrol prices crossed Rs 100-mark for the first time ever on May 29, the fuel price reached new high of Rs 102.36 per litre on Saturday. Diesel prices also increased in the city to reach Rs 94.45 a litre, the highest among metros.

Across the country as well petrol and diesel prices increased on Saturday but its retail prices varied depending on the level of local taxes in different states.

With Saturday’s price hike, fuel prices have now increased on 23 days and remained unchanged on 20 days since May 1. The 22 increases has taken up petrol prices by Rs 5.72 per litre in Delhi. Similarly, diesel have increased by Rs 6.26 per litre in the national capital.

With global crude prices also rising on a pick up demand and depleting inventories of worlds largest fuel guzzler — US, retail prices of fuel in India is expected to firm up further in coming days.

The benchmark Brent crude is currently close to $74 on the ICE or Intercontinental Exchange.

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CAIT asks Piyush Goyal to direct CCI probe into Amazon, Flipkart

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Amazon-and-Flipkart

A day after the Karnataka High Court judgement dismissing the petition of Amazon & Flipkart, the Confederation of All India Traders (CAIT) on Saturday sent a communication to Union Commerce Minister Piyush Goyal urging him to direct the Competition Commission of India (CCI) to immediately initiate investigation proceedings against Amazon and Flipkart without any further ado.

The CAIT has also urged Goyal to immediately issue a fresh Press Note replacing Press Note 2 of the FDI policy with a Monitoring mechanism to ensure that law of the land prevails and no one should dare to violate the policy, law or the rules. The CAIT has also proposed that to bring greater transparency in e-commerce business, every company indulging into any e-commerce activity through any type of electronic mode should have to take a Registration Number from the DPIIT.

CAIT declared that traders across the Country will observe forthcoming week beginning 14th June to 21st June as ” E-Commerce Purification Week” under which thousands of trade associations of the Country , on forthcoming 16th June, will handover a memorandum in the name of Prime Minister Narendra Modi to their respective District Collectors urging the Union Government to take immediate steps to stop continued violations of the policy and the rules by Amazon, Flipkart and other similar foreign funded e-commerce companies.

The traders delegation will meet Chief Minister and Finance Minister of their respective State and will call upon that small traders must not face any backlash from e-commerce companies. The trade associations across the Country will send memorandums to Prime Minister Narendra Modi and Union Commerce Minister Piyush Goyal to protect the business community from the onslaught of e-commerce companies.

CAIT said these e-commerce companies have left no stone unturned in passing deaf ears to the repeated statements made by Goyal several times and have indulged in unethical & illegal activities by flouting the mandatory provisions of the FDI Policy in both letter & spirit. This fact has been corroborated by Delhi High Court in January 2021 in the matter of Amazon v/s Future Retail that Amazon is indulging into mal-practices and yesterday when Karnataka High Court stated in its order that “It is expected that an order directing investigation be supported by ‘some reasoning’, which the commission has fulfilled”. This observation of the Court has substantiated the fact that everything is not going well and therefore, the investigation should continue. Both the trade leaders complimented CCI for arguing the case well and stood firmly with its observations and actions.

CAIT said that the misunderstanding of the e-commerce Companies that India’s laws are weak and can be manipulated either way as per the convenience must be washed away with immediate credible actions.

Traders across the country have been taken on a ride by these companies and slowly and gradually are losing the confidence in the administrative system and to regain such confidence, strict steps are needed to ensure that whosoever, small or big, should not even think of violating the law or the policy.

CAIT said inspite of these daylight blatant violations, so far the officials and the Departments concerned have not taken any significant step to curb the mal-practices of these e-commerce companies. It is requested that stern directions may be issued to the concerned officials to take immediate steps to maintain an even level playing field as elaborated by you number of times-said the trade leaders.

CAIT said that the game of capital dumping by these so called marketplaces has dumped the entrepreneurial skills and human capital of the country which is a cognizable offence. Making the human capital of any Country to sit idle, displacing them from their businesses and encroaching upon their livelihood by these capital behemoths is certainly never the ” Bharat” which Prime Minister Narendra Modi has dreamed of. This policy is killing the “Atmnirbhar Bharat” spirit of the people of India.

“These companies are trying to establish themselves as the second edition of East India Company to fulfill their aspirations and ulterior motives to control & dominate not only the e-commerce but the entire landscape of the retail trade of India which is being run by more than 8 crore traders providing employment to nearly 40 crore people and generating an annual turnover of about Rs.115 lakh crores of rupees,” CAIT added.

The traders body added that both Amazon & Flipkart have claimed from time to time that they are the most law compliant bodies and if it is so then why they are afraid of any investigation into their business model and business practices and have tried their level best to stall the investigation ordered by the CCI.

“Let there be a thorough probe by the CCI and these Companies should emerge victorious amidst various complaints made against them from time to time. The CCI investigation into their business model is in fact a credible opportunity for them to become a role model for the trade and industry of India, as claimed by them that they are the real engine of growth of small businesses and also to establish that they are the saviors. All attempts to stall the investigation proceedings by Amazon & Flipkart certainly reinforce the allegations that these Companies are indulged in law violating business model to the thick and thin,” it added.

Amazon and Flipkart claim that they are the true marketplace for e-commerce activities in India and helping small traders to grow their businesses and in fact substantial numbers of small traders have grown big under their business model, as per their claims. Their claims sends a message that these companies are in fact charitable organizations and they took pity on vulnerable conditions of small businesses and therefore providing them bigger opportunities to grow their businesses under the pious and holy umbrella of these Companies and they are the only alternative in India for the small traders to grow, CAIT said.

“However, we are of the considered opinion that such claims are absolutely unfounded and have no legs to stand. If they are true to their version and claim, they should provide a list of only top 10 sellers on their portal in the last 5 years which will reveal the fact that names of the same set of sellers will exist during these 5 years as the top sellers which are prominently related to them in one way or the other thereby consolidating the sales into few hands only. These foreign e-commerce entities are habituated to make tall claims about helping and assisting small and medium retailers while ruthlessly destroying the very fabric of our traditional Kirana and small merchants,” the body said.

“The business community of India is self dependent and does not require mercy of any foreign entity. We are absolutely not orphan Childs as perceived by these Companies and are quite competent to ensure our growth within the parameters of the policies defined for the domestic trade of India by the Government and it is not a fallacy but an admitted fact that whatever turnover is generated by the domestic trade in India, is the proven result of hard labour that traders of India have put into their businesses and the level of CSR activities being conducted by the traders in India is much larger than any of the Corporate house including Amazon, Flipkart and others,” the body said.

Traders across the Country are in pain and anguish at a recent remark made by Amit Agarwal, Country Head, Amazon India, where he said that for India to be a global destination for investments, it must assert the validity of contracts and legal agreements.

“We have never come across a more paradoxical statement by an industry head because if there is one business group that needs to regard and follow the law of the land, it is Amazon India. It will be better for Mr. Aggarwal not to make mockery of the Indian legal system that Amazon is resorting to in addition to the wide-scale and ever-subsisting violations of the FEMA/FDI Policy, lockdown guidelines and other laws and better put absolute focus in complying the policy and the law spelled out in FDI policy of the Government,” CAIT said.

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